The duo, which own a combined 12.5% stake in Brickworks Ltd. and 11.7% in Washington H Soul Pattinson & Company Ltd., are requesting shareholder meetings to vote on proposals designed to unlock significant value.

“We believe that there’s more than 1 billion Australian dollars (US$970 million) in value not being recognized by the share market across these two companies,” M.H. Carnegie principal Mark Carnegie said in a statement.

M.H. Carnegie & Co. principal Mark Carnegie

News Limited

Perpetual and M.H. Carnegie are proposing that Soul should distribute its 26.9% stake in TPG Telecom Ltd., worth more than A$940 million at current levels, to its shareholders. The duo are also proposing that after the TPG stake sale, Brickworks’ 42.7% stake in Soul should be cancelled in return for cash and promissory notes worth A$1.8 billion. The stake is worth A$1.5 billion at current levels.

“As long-term shareholders, we believe that the current structure is causing the performance of both companies to suffer, and is not sustainable,” Perpetual head of equities Matt Williams said in the same statement. He added that Perpetual was concerned by Brickworks’s underperformance against Soul, especially given more than 80% of its assets are shares in Soul.

TPG has risen more than 2800% since the beginning of 2009, while Soul has added 62% in the same period. Brickworks has gained 48% in the same timeframe.

Independent expert BDO Corporate Finance concluded the two proposals were fair and reasonable for both Soul and Brickworks shareholders, while and Deloitte Corporate Finance also endorsed both.

Brickworks shares were 2.86% higher and Soul Pattinson were 2.1% higher on Wednesday afternoon, ahead of the benchmark S&P/ASX200 index which had added 0.3%.